Oil | Despite the benefits, industry has been slow to invest in decarbonisation

(Ottawa) Oil sands industry executives insist they are all for cutting emissions and investing heavily in green technologies, but they argue there is nowhere else to put that money.


Many companies are coming off a year with higher profits, not because they produced more, but because the war in Ukraine and crises in the global supply chain have pushed up global oil prices.

Environment Minister Steven Guilbeault has repeatedly said over the past year that companies should demonstrate their commitment by investing some of this money in climate initiatives.

But in an interview with The Canadian Press, Cenovus CEO Alex Pourbaix said the companies are “being as aggressive as they can be.” [pouvaient] “.

We are not yet at the point where we can invest billions in these projects.

Alex Pourbaix, CEO of Cenovus

Cenovus is one of six oil sands companies in the New Paths Alliance, a consortium formed to work together to fully decarbonize their production by 2050. Companies plan to spend $24 billion by 2030 to reduce emissions, two-thirds of which is for carbon. capture and storage systems.

But the question of who will pay for these investments is controversial.

According to Kendall Dilling, president of the alliance, so far the consortium has spent half a billion dollars on the first phase of these projects.

The industry hopes the federal government will do more to match funding offered by the U.S. government to encourage the development of clean energy in this country.

The Liberal government has already introduced incentives for industry, including an investment tax credit for carbon capture and storage projects, and argued it was time for industry to step up its efforts.

“If they’re not making these investments when they’re making record profits, when is the right time to make these investments?” Mr. Guilbeault asked during an interview in September. If not now, I don’t know when. »

Oil and gas companies have enjoyed record profits over the past two years thanks to rising energy prices. With inflation at its highest level in decades, corporate profit growth has been neglected, with some demanding windfall taxes to absorb excess profits.

An unexpected tax dispute

In a new report from the Canadian Center for Policy Alternatives, senior economist David Macdonald found that for every dollar Canadians spent on price increases over the past two years, $0.25 went to government profits and the oil and gas sector.

However, Mr Pourbaix dismissed the idea that the industry should contribute more to the state coffers.

“I think we’re already contributing significantly,” he said, estimating the industry will pay $10 billion to $12 billion in federal taxes this year.

Mr. Pourbaix noted that countries favoring windfall taxes in the oil and gas sector have less progressive tax systems than Canada’s.

But Andrew Leach, an economics professor at the University of Alberta, said it’s difficult to make comparisons between countries because the industry in Canada pays both royalties and taxes.

And while there is much debate about the merits of windfall taxes, the federal government and some experts worry that the industry is choosing not to invest those profits in carbon capture projects that would help decarbonize the oil sands.

Mr. Leach expressed concern that the industry’s strategy is to create some excitement among Canadians, which he believes will encourage the federal government to inject more funds to cover some of the investment costs.

He also believes the strategy could backfire as Canadians watch the industry generate record profits and send money to its shareholders.

“If Canadians start asking themselves, ‘If the owners of the oil sands companies don’t want to make this bet, why should we?’ I think that could be a problem for them. »

Mr. Pourbaix noted that the costs will be realized in the later stages of these projects and the importance of rewarding shareholders in the meantime. Many Canadian oil and gas giants have chosen to do this through share buybacks, which typically boost share prices.

This prompted the federal government to impose a 2% stock buyback tax to encourage companies to reinvest profits instead of rewarding shareholders.

But some conservationists want the federal government to go further.

Keith Stewart, chief energy strategist at Greenpeace Canada, said the industry’s lack of money to support climate change rhetoric is a good reason to impose a windfall tax.

“They are still waiting for the government to come and pay them.

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